Tourism officials see troubles for Hawaii

Cruise operators will likely not ramp up schedules after Pride of Hawaii departs

With arrival numbers showing that Hawaii's visitor industry boom years have ended, there were plenty of challenges to discuss at the annual Hawaii Tourism Conference yesterday as marketers unveiled their newest strategies and identified growth opportunities from Europe, Asia, Oceania, Japan and North America.

While visitor numbers have rallied since their dismal January start, the forecast for both 2007 and 2008 levels in Hawaii is a virtually flat 1 percent gain.

Few of Hawaii's visitor markets during the first six months of 2007 were up, but visitor industry marketers said that most markets were stable and generating demand for the product. Still, Hawaii's visitor industry faces challenges on many fronts, they said.

The subprime mortgage crisis has reduced travel demand from the mainland and visitors from foreign markets still are grappling with high fuel surcharges -- that's if they can even get the flights. And, while it's true that Hawaii is uniquely positioned for growth from China and Korea, visitors from those markets still face visa hurdles.

The airline industry is struggling, and in the wake of those struggles has cut some long-haul flights to Hawaii. Cruise capacity is slated to be reduced when NCL Corp. pulls Pride of Hawaii out of the market in 2008, and fuel and labor costs have deterred other companies from ramping up their island schedules.

"There has been speculation that other operators might pick up the slack but at this point that does not look like it will happen in 2008," said John Hansen, president of the North West CruiseShip Association.

While hotels have been renovated, Hawaii's tourism product needs renewal to compete with newer, cheaper, closer destinations and even Gov. Linda Lingle has said that the state's tourism product needs to find an innovative way to deliver more culture and authenticity.

"We are one state, yet we are going against some countries that are marketing to the same customers," said David Uchiyma, marketing director for the Hawaii Tourism Authority."

Hawaii's smaller marketing budget relative to other destinations, makes it difficult to address the complaints from leisure visitors, who have said that the product is tired and that the quality of service doesn't live up to the price. Also, a tight labor force has made it difficult for Hawaii's visitor industry to fill jobs at a time when many of the current hospitality workers are retiring, Uchiyama said.

"The current workforce that really put us on the map with their Aloha spirit is retiring," he said.

While arrival numbers are flat or down across most markets, the industry is concerned that labor challenges and room reductions could prevent Hawaii from capitalizing on traffic from new growth opportunities.

"We need to make sure that we have the infrastructure here and the employees ready to receive the guests," Uchiyama said.

Despite continued barrier to entry complications from the U.S., tourism from new source markets such as Korea and China is growing, said Michael Merner, managing director of Hawaii Tourism Asia.

If Korea gets a visa waiver approved, Hawaii could see 225,000 arrivals from Korea within the next two years, he said.

"Arrivals from China to Hawaii are expected to double in the next two to three years," Merner said.